Right said Sainath

The UPA reserves its unkindest cut for the Vidarbha farmer

It is not common to see this blog cite a P Sainath article in approving terms. He continues to cast the issue of agrarian suicides in divisive terms, but gets one thing right in this op-ed about the UPA government’s 60,000 crore loan waiver for small farmers.

One funny outcome of the budget is that the media are now talking about farmers. Of course, the ‘analysis’ of what is ‘pro-farmer’ comes from the elite. From CEOs, stockbrokers, business editors, corporate lobbyists and touts in three-piece suits…

For three years, while the misery and suicides mounted in Vidharbha, there was not even the admission that a loan waiver was possible. Indeed, it was shot down by those now taking out full page ads claiming credit for it. As they complain in Vidharbha, this is not about karza maafi. It is about seeking voter maafi (voters’ forgiveness) in election year. [The Hindu]

Now a little analysistells you that the loan waiver does not provide relief to the farmers in greatest distress. But it does allow the Congress Party to go to anyone who does not do the little bit of analysis—including famous columnists (linkthanks Amit Varma)—and claim that it has done a great good job for the poor farmer.

So why is this the unkindest cut? Well, because now the middle class millions will really believe something is being done about those farmers, and people like P Sainath will get less of a sympathetic hearing, because—as the Congress Party says—aren’t we spending 1.5% of the GDP on bailing out distressed farmers?

Economic analysts have tended to focus on moral hazards, lurking fiscal deficits and the impact on the banking sector. Those are serious issues. Now it is not uncommon for politicians to bail out distressed constituents. What is unpardonable in the UPA’s case is that the loan waiver doesn’t bail out those it claims to bail out.

1 thought on “Right said Sainath”

“According to the National Sample Survey Organisation (NSSO), 48.6 per cent of the farm households surveyed were indebted; of these 61 per cent had operational holdings below 1 hectare. Of the total outstanding debt, 41.6 per cent was taken for purposes other than farm-related activities, such as healthcare and domestic needs; 57.7 per cent of the outstanding amount was sourced from institutional channels and 42.3 per cent from moneylenders, traders, relatives, and friends.”

Assuming that the sample surveyed reflected the national reality, it means that the total %age of farm households which would benefit from the waiver (for < 1 hectare holdings) is 10% (.486 x .61 x .584 x .577). At most, an identical number would have holdings between 1 and 2 hectares to qualify as marginal farmers.

So this’d mean a maximum of 20% of farmers would benefit from the waiver. Actually, if 20% of farmers benefitted, the community would be elated. The reality is that it’s probably of the order of 5% of the farmers who’d benefit from the waiver.

And, like several commentators have pointed out, the waiver does nothing to increase the farmer’s revenue/yield from land/other sources!

“According to the National Sample Survey Organisation (NSSO), 48.6 per cent of the farm households surveyed were indebted; of these 61 per cent had operational holdings below 1 hectare. Of the total outstanding debt, 41.6 per cent was taken for purposes other than farm-related activities, such as healthcare and domestic needs; 57.7 per cent of the outstanding amount was sourced from institutional channels and 42.3 per cent from moneylenders, traders, relatives, and friends.”

Assuming that the sample surveyed reflected the national reality, it means that the total %age of farm households which would benefit from the waiver (for < 1 hectare holdings) is 10% (.486 x .61 x .584 x .577). At most, an identical number would have holdings between 1 and 2 hectares to qualify as marginal farmers.

So this’d mean a maximum of 20% of farmers would benefit from the waiver. Actually, if 20% of farmers benefitted, the community would be elated. The reality is that it’s probably of the order of 5% of the farmers who’d benefit from the waiver.

And, like several commentators have pointed out, the waiver does nothing to increase the farmer’s revenue/yield from land/other sources!